When people reach the age of 65, they become eligible for health insurance coverage through Medicare. Medicare provides health coverage to seniors when they retire and lose employer-supplied insurance. As you approach retirement age, understanding how the Medicare system works can help you plan for your healthcare costs in your later years.
Understanding the Basics of Medicare
Medicare is the federal health insurance program that covers individuals aged 65 and older, as well as qualifying younger individuals with disabilities who receive Social Security Disability Insurance benefits. The Medicare program also covers individuals diagnosed with end-stage renal disease or amyotrophic lateral sclerosis (ALS/Lou Gehrig’s disease). An individual may enter the Medicare program if they meet the eligibility criteria, which include:
- Qualifying for or receiving Social Security retirement or disability benefits, or retirement or benefits from the Railroad Retirement Board
- Paying Social Security/Medicare taxes for at least 10 years (or having a spouse with a qualifying work record)
A person nearing retirement can sign up for Medicare during the “initial enrollment period,” which covers the three months before an individual turns 65, the month they turn 65, and the three months after. However, individuals do not have to enroll in Medicare during the initial enrollment period if they continue to work past 65 and receive employer-provided health insurance or have health insurance through another family member that provides prescription drug coverage similar to that offered by Medicare.
The Four Parts of Medicare Explained
The Medicare program provides health insurance coverage through four “parts,” which include:
- Part A – Part A provides coverage for inpatient hospital or hospice services. Most people of retirement age will receive Part A coverage at no cost.
- Part B – Part B provides medical insurance that covers doctor’s visits, preventative care (e.g., screenings and yearly checkups), and outpatient treatment. Most Medicare enrollees will pay a premium for Part B coverage.
- Part C – Also known as “Medicare Advantage” plans, Part C coverage comes from private insurance plans that supplement Part A and Part B coverage (some plans also include Part D coverage) and provide additional benefits, such as vision, hearing, and dental coverage.
- Part D – Part D provides prescription drug coverage through private insurance companies, either as a standalone policy added to Part A and Part B coverage or included in a Medicare Advantage plan.
Understanding Costs and Coverage Gaps
Original Medicare (Part A and Part B) places no cap on an enrollee’s out-of-pocket expenses, including co-insurance, copays, and deductibles. Seniors may face unexpected medical costs for treatments or services not covered by Part A or Part B. Thus, the Medicare program offers options for filling these coverage gaps, including Medigap (Medicare Supplement) plans or Medicare Advantage plans. Medigap will cover costs left over by Original Medicare. Most Medigap plans allow enrollees to see any doctor who accepts Medicare without obtaining a referral from their primary physician.
Medicare Advantage plans (Part C) work more like private health insurance from a PPO or HMO provider, meaning that enrollees must stay within the insurer’s network to obtain coverage. However, most Medicare Advantage plans fill coverage gaps left by Part A and Part B, including coverage for prescription drugs, dental, vision, and hearing care.
In recent years, Congress has eliminated the coverage gap of Medicare Part D, which resulted in beneficiaries facing higher out-of-pocket drug costs after the initial coverage period until catastrophic coverage began. Instead, Medicare Part D plans have more simplified coverage that includes a deductible, initial coverage phase, and catastrophic coverage phase (which begins once an enrollee reaches $2,000 of out-of-pocket costs in a year).
Contact Roses Insurance Group Today
As you approach retirement, understanding the eligibility and enrollment requirements for Medicare, the coverage options available under the program, and other special considerations can help you plan for your healthcare needs. Contact Roses Insurance Group for a free initial consultation with our associates to learn more about the Medicare program and to discuss our coverage plans for seniors and how they can help you secure the medical care you need.